Your credit card charges you a 2% fee for cash advances and has an EAR of 18%. It also starts charging you interest on cash advances as soon as you get the advance. You get a cash advance of $600 on the first day of the month. You get your credit card bill at the end of the month. What is the total finance charge you will pay on this cash advance for the month?
Your credit card charges you a 2% fee for cash advances and has an EAR of 18%. It also starts charging you interest on cash advances as soon as you get the advance. You get a cash advance of $600 on the first day of the month. You get your credit card bill at the end of the month. What is the total finance charge you will pay on this cash advance for the month?
Related questions
At June 30, 2017, the end of its most recent fiscal year, Primrose Comp Consultantsâ post-closing trial balance was as follows:
| Debit | Credit | |||
| Cash | $5,860 | |||
| Accounts receivable | 1,340 | |||
| Supplies | 770 | |||
| Accounts payable | $450 | |||
| Unearned service revenue | 1,250 | |||
| Common stock | 4,000 | |||
| Retained earnings | 2,270 | |||
| $7,970 | $7,970 |
The company underwent a major expansion in July. New staff was hired and more financing was obtained. Culver conducted the following transactions during July 2017, and adjusts its accounts monthly.
| July | 1 | Purchased equipment, paying $4,000 cash and signing a 2-year note payable for $22,400. The equipment has a 4-year useful life. The note has a 6% interest rate which is payable on the first day of each following month. | |
| 2 | Issued 22,400 shares of common stock for $56,000 cash. | ||
| 3 | Paid $4,200 cash for a 12-month insurance policy effective July 1. | ||
| 3 | Paid the first 2 (July and August 2017) monthsâ rent for an annual lease of office space for $4,500 per month. | ||
| 6 | Paid $4,300 for supplies. | ||
| 9 | Visited client offices and agreed on the terms of a consulting project. Culver will bill the client, Connor Productions, on the 20th of each month for services performed. | ||
| 10 | Collected $1,340 cash on account from Milani Brothers. This client was billed in June when Culver performed the service. | ||
| 13 | Performed services for Fitzgerald Enterprises. This client paid $1,250 in advance last month. All services relating to this payment are now completed. | ||
| 14 | Paid $450 cash for a utility bill. This related to June utilities that were accrued at the end of June. | ||
| 16 | Met with a new client, Thunder Bay Technologies. Received $13,400 cash in advance for future services to be performed. | ||
| 18 | Paid semi-monthly salaries for $12,300. | ||
| 20 | Performed services worth $31,400 on account and billed customers. | ||
| 20 | Received a bill for $2,500 for advertising services received during July. The amount is not due until August 15. | ||
| 23 | Performed the first phase of the project for Thunder Bay Technologies. Recognized $11,200 of revenue from the cash advance received July 16. | ||
| 27 | Received $16,800 cash from customers billed on July 20. |
Adjustment data:
| 1. | Adjustment of prepaid insurance. | |
| 2. | Adjustment of prepaid rent. | |
| 3. | Supplies used, $1,400. | |
| 4. | Equipment depreciation, $550 per month. | |
| 5. | Accrual of interest on note payable. | |
| 6. | Salaries for the second half of July, $12,300, to be paid on August 1. | |
| 7. | Estimated utilities expense for July, $900 (invoice will be received in August). | |
| 8. | Income tax for July, $1,340, will be paid in August |
*Journalize July Transactions**
In proper General Journal format,record the transactions for the month; include descriptions of eachtransaction with your journal entry. Use only the accounts shown inthe chart of accounts.
8/1 YOUfiled a charter with the State of Louisiana to form the YOURAccounting Corporation. The charter authorizes you to issue 5000shares of $2 par common stock. The state charged you a $75 fee tofile the charter. Since your business is not yet approved, you hadto pay this fee using personal funds.
9/1 Youreceived your charter from the State of Louisiana and officiallyopened your business. Your first order of business wasto become a shareholder of YOUR Accounting Corp. To do this, youpurchased 500 shares of common stock by issuing a check to YOURAccounting Corp for $10,000. You used this money to open a checkingaccount at First Funds Bank.
9/1 Yourented an office for YOUR Accounting Corp. The monthly rent is$500, with the first monthâs rent due immediately. You issue check#100 to Office Builders for the first monthâs rent.
9/2 Youthen went to the Apple store and purchased a new computer systemfor your business. Your Mac Pro cost $2700 and your new printercost $450. You set up a 30-day account with Apple to make thispurchase.
9/3 Youordered business cards and stationary from Marketing Media onaccount. The order totaled $250 and will be shipped FOBDestination. (Record all purchases of supplies in the Supplies onHand account).
9/4 Youdecided to purchase a new vehicle for your business. Upon visitingPro-Auto, you decide on a new SUV at a cost of $55,000. Thisvehicle will be used 100% for business purposes. You finance thevehicle with Pig E Bank at a rate of 5% for 6 years. Your firstmonthly payment is due on October 4.
NOTE: You will need to create a loan amortization schedule todetermine the amount of the monthly note and the interest expensefor each month. You can use a website such as www.bankrate.com tocreate the schedule. When recording your journal entries, round allamounts to the nearest dollar.
9/5 Youwent to the KEM Supply to purchase supplies for your business at acost of $600. KEM opened a customer charge account for you. Thepayment terms on your account will be 2/10, net 30. The time periodfor determining the payment amount begins on the purchase date.
9/6 Youpurchased a one-year auto insurance policy from InsureMart for$1200. InsureMart will send you a bill for the policy. YOURAccounting Corporation capitalizes all insurance policies on thedate of purchase and records the necessary expense at year-end asan adjusting entry.
9/10 Your firstclient, Red Fische, came in today needing assistance with filingthe appropriate paperwork to start his new seafood restaurant. Youissued invoice #1 to Red Fische and he paid you an initial $2,000Engagement Fee. Red Fische also agreed to contract with you toprovide accounting services for $2,500 per month.
9/12 You issue check#101 to YOUR Accounting Corp to establish a $500 Petty Cash Fund.You will use this account to make small cash purchases.
9/12 You reimburseyourself for the filing fees associated with forming yourcorporation.
9/14 You paid KEM Supply by issuingcheck #102
9/15 You hire anadministrative assistant, Mandi Handi, she will be paid a monthlysalary of $1500. You have decided that all pay periods will end onthe last day of the month and that checks will be issued on the5th of each month.
NOTE: Assume the following rates when preparing the payroll:federal income tax 15%, state income tax 5%, and FICA 7.65%.
YOUR Accounting Corp. has state and federal unemployment insurancerates of 1% (FUTA) and 2% (SUTA) on the first $7,700 of wages peremployee. The employer FICA rate is 7.65%.
9/16 Marketing Mediadelivered your business cards and stationary. Check #103 was issuedto pay for the supplies.
9/20 You visited anew client, Anita Cooke, to set up a Quickbooks accounting systemfor her new business, Cooking For You. You gave Anita and invoice#2 for the Engagement Fee and she paid you by issuing a check inthe amount of $2,000. Anita also agreed to a monthly fee of $1,500for you to handle her ongoing accounting needs.
9/22 You purchased$50 of fuel for your new SUV from Get ân Go. You charged this toyour Get ân Go account.
9/30 Mandi sentpro-rated invoices, #3 & #4 , to Red Fische and Cooking For Youfor Monthly Accounting Services. The payment terms are 1/10, net30.
9/30 You accruedinterest on the Pig E. Bank note. Accrue interest based on thenumber of days in the month.
9/30 You computedand accrued the payroll for September.
9/30 You receivedmonthly bills for the following:
Max Power Company - $100, terms n/30
WaterWorks #1 - $20, terms n/30.
CHART OF ACCOUNTS:
| Cash | 105 | ||
| Petty Cash | 107 | ||
| Accounts Receivable | 110 | ||
| Supplies on Hand | 130 | ||
| Prepaid Insurance | 140 | ||
| Computer Equipment | 220 | ||
| AccoumulatedDepreciation - Computer Equipment | 221 | ||
| Cell Phone | 230 | ||
| AccoumulatedDepreciation - Cell Phone | 231 | ||
| Vehicles | 240 | ||
| AccumulatedDepreciation - Vehicles | 241 | ||
| Accounts Payable | 310 | ||
| Customer Deposits (UnearnedRevenue) | 320 | ||
| SUTA Payable | 330 | ||
| FICA Payable | 332 | ||
| FUTA Payable | 334 | ||
| Federal Income TaxPayable | 336 | ||
| State Income Tax Payable | 338 | ||
| Current Maturities ofLong-Term Debt | 375 | ||
| Notes Payable (long-term) | 410 | ||
| Interest Payable | 420 | ||
| Salaries Payable | 425 | ||
| Common Stock ($2 parvalue) | 520 | ||
| Additional Paid-in Capital onCommon Stock | 521 | ||
| Retained Earnings | 550 | ||
| Dividends | 560 | ||
| Engagement Fees | 605 | ||
| Monthly Accounting ServicesRevenue | 610 | ||
| Hourly Accounting ServicesRevenue | 620 | ||
| Tax Services Revenue | 612 | ||
| Sales Discounts | 614 | ||
| Advertising & PromotionExpense | 725 | ||
| Depreciation Expense | 727 | ||
| Rent Expense | 730 | ||
| Insurance Expense | 735 | ||
| Supplies Expense | 740 | ||
| Meals & Entertainment | 745 | ||
| Taxes & Licenses | 767 | ||
| Telephone Expense | 770 | ||
| Utilities Expense | 775 | ||
| Fuel Expense | 780 | ||
| Interest Expense | 820 | ||
| Payroll Tax Expense | 825 | ||
| Salaries Expense | 830 | ||
| Income Summary | 900 | ||
